H/L Fraud and Abuse

Ron Hira [page 2]: Instead of expanding these non-immigrant work-permit programs, Congress should focus on repairing them so that they serve their intended purposes.

Ron Hira [page 7]: The H-1B and L-1 programs are both broken, but they can be fixed.

The first step is for Congress and the Bush administration to complete a top-to-bottom review of both programs in order to understand their real impacts on the US workforce, and then to align program practice with its intent. The law must be rewritten to establish a market test and the following principles:

a) that US workers must not be displaced by guest-workers, and that employers must demonstrate they have looked for and could not find qualified US workers;

b) guest-workers must be paid market wages; and

c) guest-worker employers should be subject to random audits to ensure they are fulfilling their attestations.

These might not be easy fixes, but they also are not particularly difficult. All solutions must be made with special attention to how they affect the program in practice.

For example, for the H-1B program, part a) could be met by extending the H-1B dependent attestations to all H-1B employers. But for this reform to be effective it needs to be coupled with sufficient oversight. As described above, even though H-1B dependent firms attest to a labor market test, there are strong indications that many do not comply, yet are never held accountable. In order to close the loop and ensure compliance with the attestations, random audits need to be established. Paying for this additional government oversight could easily be covered by the current visa fees.

Ron Hira : Some of the principles for reform should be:a) H-1B workers are paid market wagesb) US workers should not be displaced by H-1B workersc) employers should demonstrate they have looked for and could not find qualified US workers; and,d) H-1B employers should be subject to random audits.

The program currently meets none of these principles.

Ron Hira [page 30]: But it seems to me that if these are the principles that the folks that are promoting an expansion of H-1B program are trying to adhere to that we should make the program in practice meet those principles. I think the programs are broken, but they can be fixed. And, you know, there are some basic things that we can do.

We can rewrite the law to establish a market test. We can ensure that US workers are not displaced by guest workers. We can ask employers to demonstrate that they have looked for and could not find qualified US workers. We can insist that guest workers are paid market wages. And we can also ensure that there's some oversight by having some random audits of these programs.

Ron Hira: The H-1B program can be cleaned up by closing loopholes and increasing oversight. Senators Richard Durbin (D-Ill.) and Chuck Grassley (R-Iowa) are expected to reintroduce a version of last year's bipartisan reform bill in the coming weeks. Passed into law, it would require employers to try to hire Americans first and to pay H-1B workers market wages. It would also bar employers from replacing American workers with H-1B holders. Perhaps most important, it would create a random-audit process to ensure compliance with the rules.

It should also involve the creation of an independent board to gauge, at regular intervals, how many immigrants we can absorb without hurting the job prospects of American workers.

Then, just as the Federal Reserve oversees the supply of money, we could rationally regulate the flow of workers being welcomed primarily for economic reasons. [C1, C2]

H-1B Benefit Fraud & Compliance Assessment

Fraud is defined as a willful misrepresentation, falsification, or omission of a material fact. Fraud entails any willful manifestation that amounts to an assertion or assertions not in accordance with the facts; a knowing untrue statement of fact; or a purposeful, incorrect, or false representation material to the adjudication of the petition. This definition is consistent with section 212(a)(6)(C)(i) of the Act, which states, “ny alien who, by fraud or willfully misrepresenting a material fact, seeks to procure (or has sought to procure or has procured) a visa, other documentation, or admission into the United States or other benefit provided under this Act is inadmissible.”In keeping with the joint USCIS/ICE anti-fraud strategy, when a BFCA concludes that the petitioner or beneficiary has committed fraud, FDNS refers the case to ICE for consideration of formal criminal investigation and prosecution. ICE then has 60 days to accept the case for investigation or decline it and return it to FDNS. If ICE declines to open a criminal investigation, FDNS forwards the case with its administrative findings to a USCIS adjudications component for denial or revocation of the petition or application, as appropriate. According to current policy, if the beneficiary is in the US, he or she is placed in removal proceedings. A lookout summarizing the fraud finding is also posted in case the beneficiary does not appear at his or her removal proceeding or attempts to pursue other immigration benefits. The FDNS IO enters the BFCA case into the FDNS Data System (FDNS-DS) so that the information may be tracked and so that known fraud indicators may be compared against incoming receipts in case the petitioner or beneficiary files other applications or petitions. [page 2]

Technical Violation

BFCA identified some circumstances where, although there was no evidence of willful fraud, there was evidence that the employer or alien beneficiary had failed to comply with applicable laws and regulations. For purposes of this BFCA, FDNS has identified those situations as having at a minimum a technical violation(s). [page 7]

It is important to note that when reviewing the I-129 petitions in the BFCA sample population, USCIS took a comprehensive look at all aspects of a particular filing, beginning with the filing of the LCA with the Department of Labor through the entire time that the beneficiary was in H-1B nonimmigrant status. The intent was to examine all levels of fraud, technical violation(s), or abuse in the H-1B nonimmigrant visa program based on a snapshot in time; not to investigate the case for criminal prosecution. USCIS examined employer compliance with all statutory and regulatory provisions associated with the H-1B nonimmigrant visa program, including the terms and conditions of the LCA. USCIS also noted any LCA violations that were uncovered. [page 7]

Methodology

To ensure that the beneficiary was present in the U.S. and thus available for an interview regarding their purported employment, this BFCA drew a random sample5 of case files from a population of I-129 petitions filed on behalf of individuals who were:

• seeking to extend their existing H-1B status either with the current employer or a new employer or• seeking new employment as an H-1B while currently residing in US in another nonimmigrant visa status.

Petitions filed in behalf of beneficiaries who were still residing abroad were excluded from the population because the ability to interview the beneficiary and verify information once he/she enters the country and presumably begins employment with the petitioner significantly enhances our ability to detect fraud or technical violations. Until the beneficiary enters US and commences employment with the petitioner, USCIS is unable to verify information such as payment of the proffered wage, the performance of the stated job duties, and employment at the location stated on the petition and LCA. However, this exclusion should have minimal impact on the results, because only about 1,200 petitions for initial H-1B status were filed during the timeframe used to draw the sample. [page 5]

The H-1B BFCA sample consisted of 246 cases drawn from a total population of 96,827 approved, denied, or pending I-129 petitions filed between October 1, 2005 and March 31, 2006. The overwhelming majority of the petitions in the BFCA sample were filed in behalf of beneficiaries who already held H-1B visas.

The sample design assumed a rate of occurrence not more than 20%, a confidence level of 95%, and a margin of error of plus or minus 5% [1 footnote page 8].

In addition, although there were cases that exhibited both fraud and technical violations if a case rose to the level of material misrepresentation, it was included in the fraud category and not the technical violation category. [page 8]

Job location not listed on LCA and I-129

Ron Hira: A recent audit of the program by Department of Homeland Security found that more than one in five H-1Bs were granted under false pretenses, either outright fraud or serious technical violations.

Ron Hira: The report makes it clear that the H-1B program is rife with abuse and misuse. It shows the desperate need for an auditing system.

Ron Hira: Gaps in the rules had allowed technology companies, including American ones, to misuse the program. Basically, H-1B has been thoroughly corrupted.

Ron Hira: But in reality, the H-1B program has been thoroughly corrupted.

28 (/51 = 55%) cases did not list job location on LCA and I-129: 15 had a final determination of fraud and 13 had a final determination of violation [1 page 9].

LCA is limited to listing only two geographical areas (worksites). If an employer intends to employ H-1B in more than two locations (except short-term placements meeting the specified conditions under 20 C.F.R. 655.735), the employer must file additional LCA(s) (with DoL) to cover the other locations. Likewise, if an employer who has already filed an I-129 petition with USCIS intends to employ the alien in additional locations (beyond those listed on the original LCA), the employer must file additional LCA(s) [1 page 3].

Misrepresentation of H-1B Status

a. Beneficiaries misrepresented their H-1B status by reentering the U.S. as H-1Bs after they had quit or were terminated from their authorized jobs.

This will not be a fraud if H-1B is allowed time between jobs: currently H-1B has 0 days between jobs. In general, there will be fewer violations if H-1B has simpler set of mechanisms that better reflect the shape of today's markets, as opposed to being sadistic.

b. The beneficiary ported (i.e., transferred to a new employer) under the provisions of AC21 to work for a new H-1B employer. However, the beneficiary started work with the prospective (new) employer before that employer had even filed the I-129 petition.

Fraudulent/Forged Documents

10 (/246 = 4%) cases had fraudulent/forged documents: all 10 had a final determination of fraud [1 page 10].

Keith J. Winstein [1]: Inflated academic credentials in the nation's executive suites may be more common than generally thought.

A survey of 358 senior executives and directors at 53 publicly traded companies has turned up at least seven instances of claims that individuals had academic degrees they don't have. In some cases, the slip-ups don't appear to have been intentional, and may have been caused by misunderstandings.

[2]: A new survey of 358 officers at 53 publicly-traded companies has turned up at least 10 instances of senior executives or directors who claimed academic degrees they didn't earn.

Keith J. Winstein and Don Clark [6.]: Mr. Manian is at least the 11th senior executive or director to surface recently in a search for business leaders with inflated academic credentials

Keith J. Winstein [1]: Further down the corporate pecking order, inflated credentials are fairly common: about 20% of job seekers and rank-and-file employees undergoing background checks by their companies are found to have inflated their educational credentials.

Cari Tuna and Keith J. Winstein [4]: A fair number of job applicants misrepresent their credentials: about 20% of job seekers and employees undergoing background checks exaggerate their educational backgrounds. In a 2004 survey of human-resource professionals, 61% said they "often" or "sometimes" find résumé inaccuracies when vetting prospective hires, according to the Society for Human Resource Management.

Job duties significantly different from position description listed on the LCA/I-129 petition

6/51 = 12% cases with a technical violation or abuseOut of these 6 cases, 5 had a final determination of fraud, and 1 had a final determination of Technical Violation.[1 page 10]

In one instance, the position described on the petition and LCA was that of a business development analyst. However, when USCIS conducted its review, the petitioner stated the H-1B beneficiary would be working in a laundromat doing laundry and maintaining washing machines [1 page 7]

grASSley: Until we make a conscious effort to close the loopholes, we're going to see continued abuse where people coming to this country on H-1B visas are working at Laundromats.

Eilene Zimmerman: “Most people are used to working in a job that has a specific description,” he said. “But your consultancy is going to unfold and change, so you need to be flexible.”

Already Under ICE Investigation

6 (of 246 = 2.4%) H-1Bs were Under ICE Investigation: all 6 H-1Bs had a final determination of fraud [1 page 10].

Moira Herbst Inc: After a federal investigation into Cygate, Patel and five other natives of India recruited by the company pled guilty to visa violations in June.

A tech service firm called Vision Systems Group has been charged, in a criminal suit filed in February, with taking another approach to visa fraud. Under federal law, companies that apply for work visas need to pay the prevailing wage for a specific occupation in a particular region. The rule is aimed at preventing employers from reducing their costs by hiring foreign workers to replace Americans.

Federal prosecutors say Vision Systems, based in New Jersey, set up an office in low-wage Coon Rapids, Iowa, and claimed that up to 25 immigrant employees worked there between August 2003 and December 2008, when they actually worked in higher-wage regions.

Dustbin-grASSley-Herbst-Hira "US Tech worker" NONSENSE

Moira Herbst: The H-1B visa program has become increasingly controversial in recent years as groups such as the Programmers Guild and WashTech, which represent US Tech workers, allege it is being abused, resulting in mistreatment of foreign workers, wage depression, and the displacement of US workers.

Ron Hira [page 24]: And if you follow what's going on in the IT world and you talk to IT workers, they really view these guest worker programs frankly as a scam, and as a way for corporations to take advantage and really undercut their labor market.

Ron Hira [page 1]: But on the other hand, US workers argue that they are being undercut by policies that allow US workers to be displaced by foreign workers willing to be paid less.

a) Accounting, human resources, business analysts, sales, and advertising occupations encompassed 11% (26 cases) of the sample. Among this sample, 42% (11 cases) were associated with some type of fraud/violation [1 page 13].

b) Managerial occupations encompassed 4% (9 cases) of the sample. Among this sample, 33% (3 cases) were associated with some type of fraud/violation.

c) Art occupations encompassed 3% (7 cases) of the sample. Among this sample, 29% (2 cases) were associated with some type of fraud/violation.

d) Computer Professionals occupations encompassed 42% (104 cases) of the sample. Among this sample, 27% (28 cases) were associated with some type of fraud/violation

Computer H-1Bs are 4-14.9 times number % of top 4 violators but have the least violation %. H-1Bs filed for accounting, human resources, business analysts, sales and advertising occupations are more likely to be associated with fraud/violation than other occupational categories [1 page 15].

Dustbin-Grassley-Herbst-Hira Indian outsourcer NONSENSE

Ron Hira: In 2008 the Labor Dept. certified more than 5,000 applications for H-1B positions paying less than $15 an hour.

Companies employing more than 25 employees represented 77% (190 cases) of the sample. Among this sample, 11% (21 cases) were associated with some type of fraud or technical violation(s) [1 page 14].

Companies with an Annual Gross Income greater than $10 million represented 46% (113 cases) of the sample. Among this sample, 7% (8 cases) were associated with some type of fraud or technical violation(s) [page 14].

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